Clyde Prestowitz is the founder and president of the Economic Strategy Institute (ESI), where he has become one of the world's leading writers and strategists on globalization and competitiveness, and an influential advisor to the U.S. and other governments. He has also advised a number of global corporations such as Intel, FormFactor, and Fedex and serves on the advisory board of Indonesia's Center for International and Strategic Studies.

November 22, 2010 - 5:01 pm

I have just learned of the death yesterday of my mentor and friend Chalmers Johnson at his home in Cardiff-by-the-Sea near San Diego. Chal, as he was known to his friends, was a man of many parts — scholar, teacher, literary critic, activist, conversationalist, music lover, prophet and more.

I first got to know him in the early 1980s when, as counselor to the secretary of Commerce, I was a lead negotiator with Japan on a series of difficult economic issues and Chal’s then latest book, MITI and the Japanese Miracle, was being devoured by U.S. trade and diplomatic officials desperately seeking to gain some understanding of what made the Japanese economy tick.

I’ll never forget my first meeting with Chal and his wife and muse Sheila over dinner at their home in the hills above the University of California at Berkeley where he was then teaching. The conversation moved like quick silver, flowing from one subject to another and back in an instant. By the time the dessert arrived I was physically and mentally exhausted. Over the years, I learned to be well prepared for dinner talk at the Johnson household.

It was Chal and Sheila who encouraged me in 1986 to write my first book, a look at U.S.-Japan negotiations in the 1980s, and it was to Chal and Sheila that in 2009 I sent the manuscript of my most recent book for their critical comment. I held my breath awaiting their response, and their okay meant more than all the subsequent reviews and commentary. I knew that if Chal and Sheila had given it their seal of approval, it was okay.

A China scholar before becoming a Japan watcher in the 1970s, Chal had three fundamental insights that are as significant today (perhaps more so) as they were in the 1980s. The first was that Japan and the United States were playing very different economic games. He very early understood that Japan’s industrial policies that focused great effort on development of what were deemed to be strategic industries and of and that emphasized export led growth while suppressing domestic consumption in favor of fostering high rates of saving and investment constituted a new economic paradigm.

Although both the United States and Japan were understood to have democratic, capitalist, market oriented systems, Chal perceived that they were in fact two different variations of capitalism. Whereas the Americans thought the market was an end in itself and embraced competition policy and laissez faire free trade, the Japanese saw the market as a tool to be used in conjunction with interventionist policies to achieve the end of industrial and technological leadership. None other than Singapore’s long time Prime Minister Lee Kuan Yew ratified Chal’s insight with his famous injunction to his Singaporean citizens to “look east” for their development model.

Chal’s second key insight was that this asymmetrical relationship between the U.S. and Japanese economies was disadvantageous to America while causing endless trade frictions between the two countries. The problem was that the U.S. economy was relatively open to imports and foreign investment while that of Japan was relatively closed. This resulted in rapid penetration of U.S. markets by Japanese exporters who then gained economies of scale that allowed them to reduce costs faster than their American competitors who were virtually locked out of the Japanese market. The U.S. response was to accuse Japan of cheating and to engage in endless negotiations to “open” the Japanese market. But, of course, this never worked because having a relatively closed market was part of the fundamental Japanese strategy which did not recognize that the market was an end in itself.

Chal’s third insight was that the American empire with its 770 plus military bases around the world, its defense spending equivalent to that of the rest of the world combined, its priority over economic and social considerations, its frequent alliance with undemocratic and even corrupt foreign countries and leaders, and its continuous discovery of new enemies is strangling both the American economy and American democracy.

One thing that always impressed me about Chal was how hard he worked and how much he produced. He will be greatly missed not only by Sheila and his friends but by our country.